Victoria invested her savings in an account at 4% p.a. simple interest for 10 months. Ifshe earned an interest amount of $225 at the end of the term, what was the principalamount of the investment?

[tex]\begin{gathered} A=P(1+r\cdot t) \\ \\ A=\text{Amount} \\ P=\text{Principal} \\ r=\text{Interest rate (in decimal form)} \\ t=\text{time (in years)} \end{gathered}[/tex]

To find the Principal amount solve P:

[tex]P=\frac{A}{1+r\cdot t}[/tex]

1. Turn the time into years:

[tex]10\text{months}\cdot\frac{1\text{year}}{12\text{months}}=\frac{5}{6}\text{year}[/tex]

2. Turn the interest rate into decimals:

[tex]\frac{4}{100}=0.04[/tex]

3. Substitute the values and evaluate the formula to find P:

[tex]P=\frac{225}{1+0.04\cdot\frac{5}{6}}\approx217.74[/tex]

Victoria invested her savings in an account at 4% p.a. simple interest for 10 months. Ifshe earned an interest amount of $225 at the end of the term, what was the principalamount of the investment?

Respuesta :

Then, the principal investment required to get a total amount of $225 at a rate of 4% in 10 months is $217.74

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